Commitments to fund mortgage loans (interest rate locks) to be
sold into the secondary market and forward commitments for the
future delivery of these mortgage loans are accounted for as
derivatives not qualifying for hedge accounting. Fair values of
these mortgage derivatives are estimated based on changes in
mortgage interest rates from the date of the commitments.
Changes in the fair values of these derivatives are included in
net gains on sales of loans.

MORTGAGE BANKING DERIVATIVES

Commitments to fund mortgage loans (interest rate locks) to be sold into the secondary market and forward commitments for the future delivery of these mortgage loans are accounted for as derivatives not qualifying for hedge accounting. Fair values of these mortgage derivatives are estimated based on changes in mortgage interest rates from the date of the commitments. Changes in the fair values of these derivatives are included in net gains on sales of loans.